Paid Placement SEM Is Dead. Long Live Paid Placement

Search engine marketing (SEM) has always been, at least to some extent, about position: organic position, XML feed listing position (for relevant traffic), or paid placement position in the keyword auction marketplaces.

In organic search, when log files show lots of entries (traffic) from a specific word or phase (indicating the phrase had good position for a particular engine), it's great fun to look in the SERPs (define) to see your listing high. You turn to your SEO (define) Web team (or anyone who will listen) and engage in high fives, celebrating the luck and skill that combined to create good fortune.

In the early days of paid placement, there was also a certain satisfaction in setting a specific keyword in GoTo (now Yahoo Search, although many of you know the company as Overture) to the second position, and checking Yahoo a few minutes later to see that listing right where you placed it.

Then Google came along with its hybrid auction. It used an AdRank algorithm that took a CPC (define) bid and a normalized CTR (adjusted for current position) to create a scenario where position was far less controllable. Yet we still considered Google as paid placement, pay-per-click (PPC) search advertising. Google was revolutionary in the PPC search world, because it took the searcher's opinion into account to assure more relevant ads.

Overture (now Yahoo Search) also moved to take searcher voting into account by eliminating keyword listings when the creative underperformed. Its click index is essentially a CTR measure, but at least you always get a warning before a low click index listing is removed. There are rumors Yahoo may move to an even more yield-managed search marketplace, as it has on the contextual side of its business.

If you've been looking for your ad in a particular Google position lately, you might not find it where you expect. This is due to several factors. First, many marketers are starting to segment ad campaigns by geography. Data indicates clicks from different geographies are worth differing amounts. It's not a single North American market anymore. Also, there are differing paid listing results within SERPs. Google, Yahoo, and the other engines have been tuning their algorithms. I'll explain why.

The evolution of Google's ad network with both search and contextual network partners created a challenge for Google engineers looking to provide the best paid-search user experience. The correctly calculated AdRank for a specific ad for a specific marketer and keyword when that ad is displayed at each network partner could be quite different.

The most relevant ad within a SERP, as judged by AOL Search users, may be very different from Google search results. No big surprise. AOL members who search on AOL Search and Google's searcher mix are different in many ways: behaviorally, demographically, and psychographically (on average). The same holds true for other Google network partners: Ask Jeeves, EarthLink, and the rest of a very large, complex search and contextual network.

A smart ad network programmer or engineer would factor this in when writing the ad display algorithm. There are other factors a programmer might take into account to provide a better search experience and higher yield (more revenue per search). These additional factors might include how different ads perform based on:

Frequency (whether you've seen or been exposed to the ad in an earlier search)

Geography

Browser

Operating system

Time of day

Day of week

ISP

Other factors that the engines find improve relevance and yield

As the engines roll out personalized search services, they'll have even more data to use to calculate the best (most highly relevant and highest revenue) ads to run in a SERP. Additional attributes might include:

Gender

Age

Tenure (how long the engine has known you)

Responsiveness to brand ads

Responsiveness to promotional language

MSN isn't publicly sharing specifics of its upcoming adCenter, and I can't share many details being discussed behind the scenes. But clearly search listings will exist in a real-time marketplace, and voluntarily collected profile information will be used to allow marketers to better target ads.

Even if the only factor the engines used to decide which ads to show an individual were a frequency cap (ad is shown X times with no click), then you (or your client) checking paid placement ads would receive a very different SERP than your own prospective customers. You'd either click your ad a lot (to test landing page links) or very rarely (or never). You'll never know what the user experience is for millions of searchers on an individual basis; all you'll know is what's reported in engine-generated reports or from additional data you can glean from a campaign management or Web analytics programs.

The more variables the engines use to target ads, the less predictable campaigns will be from the perspective of visibility, position, and traffic. Should we call an evolution to unpredictable positions a paid placement campaign? There's no better term for this type of search advertising yet. Regardless, upcoming changes to paid search marketplaces will be powerful, targeted, and, when used incorrectly, dangerous.

Want to learn more? Attend ClickZ Live New York March 30 - April 1. With over 15 years' experience delivering industry-leading events, ClickZ Live brings together over 60 expert speakers to offer an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!

ABOUT THE AUTHOR

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

Featured White Papers

Google My Business Listings DemystifiedTo help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.